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Previous: NEW AMERICA HIGH INCOME FUND INC, DEF 14A, 1997-04-18 |
Next: FLORIDA INCOME FUND III LIMITED PARTNERSHIP, 8-K, 1997-04-18 |
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D C 20549
(Mark One)
(CHECK MARK) QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 8, 1997
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to_____________________
Commission file number 1-9787
Flowers Industries, Inc.
(Exact name of registrant as specified in its charter)
Georgia 58-0244940
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
U. S. Highway 19, P O Box 1338, Thomasville, Georgia
(Address of principal executive offices)
31799
(Zip Code)
912/226-9110
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days..
Yes [CHECK MARK] No __________
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d)
of the Securities Exchange Act of 1934 subsequent to the distribution
of securities under a plan confirmed by a court.
Yes _________ No __________
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Title of Each Class Outstanding at April 11, 1997
Common Stock, $.625 Par Value 58,749,221
FLOWERS INDUSTRIES, INC.
INDEX
Page Number
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet
March 8, 1997 and June 29, 1996 3
Consolidated Statement of Income
Thirty Six Weeks Ended March 8, 1997
and March 9, 1996 5
Consolidated Statement of Income
Twelve Weeks Ended March 8, 1997
and March 9, 1996 6
Consolidated Statement of Cash Flows
Thirty Six Weeks Ended March 8, 1997
and March 9, 1996 7
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 11
- -2-
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
(000's Omitted except share data)
CURRENT ASSETS: March 8, 1997 June 29, 1996
<S> <C> <C>
Cash and temporary investments $ 4,886 $ 25,039
--------- ---------
Accounts receivable 117,925 120,301
--------- ---------
Inventories:
Raw materials 42,387 25,939
Finished goods 34,434 25,527
Supplies 19,169 17,110
--------- ---------
95,990 68,576
--------- ---------
Deferred income taxes 11,982 10,992
Prepaid expenses 6,592 5,319
--------- ---------
237,375 230,227
--------- ---------
PROPERTY, PLANT & EQUIPMENT:
Land 23,457 23,386
Buildings 183,909 183,502
Machinery and equipment 393,734 393,319
Furniture, fixtures and transportation equipment 23,008 21,365
Construction and capital projects in progress 118,576 63,005
--------- ---------
742,684 684,577
Less: accumulated depreciation (294,534) (264,107)
--------- ---------
448,150 420,470
--------- ---------
OTHER ASSETS AND DEFERRED CHARGES:
Investment in unconsolidated affiliate 74,099 68,326
Notes receivable from distributors 0 61,236
Other long-term assets 33,552 24,567
--------- ---------
107,651 154,129
--------- ---------
COST IN EXCESS OF NET TANGIBLE ASSETS:
Cost in excess of net tangible assets 45,286 45,962
Less: accumulated amortization (2,059) (1,345)
--------- ---------
43,227 44,617
--------- ---------
$ 836,403 $ 849,443
========= =========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
- -3-
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(000's Omitted except share data)
CURRENT LIABILITIES: March 8, 1997 June 29, 1996
<S> <C> <C>
Notes payable - commercial paper $ 37,996 $ 0
Notes payable 5,677 6,593
Obligations under capital leases 2,386 1,988
Accounts payable 54,960 98,796
Accrued taxes other than income taxes 4,769 5,369
Income taxes 4,172 1,264
Accrued compensation, interest and other liabilities 76,947 67,738
-------- --------
186,907 181,748
-------- --------
LONG-TERM NOTES PAYABLE 256,171 254,355
-------- --------
OBLIGATIONS UNDER CAPITAL LEASES 2,751 2,573
-------- --------
INDUSTRIAL REVENUE BONDS 17,570 17,770
-------- --------
DEFERRED INCOME TAXES 46,024 47,270
-------- --------
DEFERRED INCOME 0 40,403
-------- --------
COMMON STOCK:
Par value $.625 authorized 100,000,000 shares,
issued 59,090,726 36,932 36,932
Capital in excess of par value 58,079 58,783
Retained earnings 251,638 234,069
Less - common stock in treasury, 308,006
and 506,749 shares, respectively (5,060) (6,493)
Less - Restricted Stock Award and Equity
Incentive Award (14,609) (17,967)
-------- --------
Total common stockholders' equity 326,980 305,324
-------- --------
$836,403 $849,443
======== ========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
- -4-
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(000's Omitted except share data)
For the 36 Weeks Ended
March 8, 1997 March 9, 1996
<S> <C> <C>
Sales $1,009,954 $ 835,225
Sale of distributor notes 43,244 0
Other income (expense) (74) 3,842
---------- -----------
1,053,124 839,067
---------- -----------
Materials, supplies, labor and other manufacturing costs 561,747 453,639
Selling, delivery and administrative expenses 380,907 315,941
Depreciation and amortization 31,035 27,644
Interest 17,423 7,263
---------- -----------
991,112 804,487
---------- -----------
Pre-tax income 62,012 34,580
Federal and state income taxes 23,441 13,071
Net income from investment in unconsolidated affiliate 5,810 0
---------- -----------
Net income $ 44,381 $ 21,509
========= ===========
Net income per common share $ 0.77 $ 0.38
========= ===========
Weighted average number of shares outstanding used in
calculation of net income per common share 57,924,662 57,333,224
Cash dividends paid per common share $ 0.4575 $ 0.4275
========= ===========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
- -5-
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(000's Omitted except share data)
For the 12 Weeks Ended
March 8, 1997 March 9, 1996
<S> <C> <C>
Sales $ 301,392 $ 275,013
Other income 2,558 1,150
----------- ----------
303,950 276,163
----------- ----------
Materials, supplies, labor and other manufacturing costs 159,114 149,996
Selling, delivery and administrative expenses 119,317 104,415
Depreciation and amortization 10,669 9,505
Interest 4,938 3,112
----------- ----------
294,038 267,028
----------- ----------
Pre-tax income 9,912 9,135
Federal and state income taxes 3,747 3,453
Net income from investment in unconsolidated affiliate 6,005 0
----------- ----------
Net income $ 12,170 $ 5,682
=========== ==========
Net income per common share $ 0.21 $ 0.10
=========== ==========
Weighted average number of shares outstanding used in
calculation of net income per common share 58,145,661 57,443,124
Cash dividends paid per common share $ 0.1550 $ 0.1450
=========== ==========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
- -6-
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(000's Omitted)
For the 36 Weeks Ended
March 8, 1997 March 9, 1996
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $1,000,373 $ 828,907
Interest received 719 433
Sale of distributor notes receivable 65,954 0
Other 3,566 2,352
---------- ---------
Cash provided by operating activities: 1,070,612 831,692
---------- ---------
Cash paid to suppliers and employees 996,486 801,165
Interest paid 20,164 7,183
Income taxes paid 24,089 11,099
---------- ---------
Cash disbursed from operating activities 1,040,739 819,447
---------- ---------
Net cash flow from operating activities (See Schedule 1) 29,873 12,245
---------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment (56,442) (40,949)
Acquisition of businesses 0 (7,311)
Investment in joint venture 0 (62,054)
Divestiture of business 200 1,061
Other (4,441) (140)
---------- ---------
Net cash disbursed for investing activities (60,683) (109,393)
---------- ---------
Cash flows from financing activities:
Dividends paid (26,813) (24,795)
Purchases of treasury stock (207) (604)
Increase in short-term notes payable 37,996 0
Increase in long-term notes payable 13,625 100,135
Payments of long-term notes payable (13,944) (2,559)
---------- ---------
Net cash provided by financing activities 10,657 72,177
---------- ---------
Net decrease in cash $ (20,153) $ (24,971)
========== =========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
- -7-
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(000's Omitted)
For the 36 Weeks Ended
Schedule 1 March 8, 1997 March 9, 1996
<S> <C> <C>
Schedule reconciling earnings to net cash flow from operating activities:
Net income $ 44,381 $ 21,509
-------- --------
Noncash expenses, revenues, losses and gains included in income:
Depreciation and amortization 31,035 27,644
Increase in accounts receivable (1,427) (10,432)
Increase in inventories (27,557) (4,119)
Increase in prepaids (1,209) (2,304)
Decrease in distributor notes receivable 65,954 0
Decrease in accounts payable (44,297) (10,044)
Increase (decrease) in accrued taxes and other liabilities 12,047 (10,009)
Decrease in deferred distributor income (43,244) 0
Equity in net income of unconsolidated affiliate (5,810) 0
-------- --------
$ 29,873 $ 12,245
======== ========
Schedule 2
Schedule of noncash financing activities:
Common stock received in connection with the exercise of employee
stock options $ 1,950 $ 1,527
======== ========
Stock issued and held in escrow in connection with Restricted Stock
Awards $ 94 $ 3,004
======== ========
Exercise of Equity Incentive Awards $ 2,365 $ 1,653
======== ========
Stock released from Richter's escrow $ 2,565 $ 0
======== ========
Note receivable from divestiture of business $ 1,311 $ 2,500
======== ========
Stock issued for acquisition $ 4,000 $ 1,119
======== ========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
- -8-
FLOWERS INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to
present fairly the financial position as of March 8, 1997 and
June 29, 1996, the results of operations for the twelve and
thirty-six weeks ended March 8, 1997 and March 9, 1996 and
statement of cash flows for the thirty-six weeks ended March 8,
1997 and March 9, 1996.
2. The results of operations for the twelve and thirty-six week
periods ended March 8, 1997 and March 9, 1996, are not
necessarily indicative of the results to be expected for a full
year.
3. During September 1996, the Company accrued for certain claims by
the Internal Revenue Service ("IRS"), relating primarily to the
Company's independent distributor program. The IRS asserted that
the independent distributor program generated ordinary income
upon the initial sale of the territory.
In a related, but separate transaction, on September 20, 1996,
the Company sold $66,000,000 of notes receivable from independent
distributors to a financial institution. Of the $66,000,000 of
notes sold, $44,000,000 was initially without recourse to the
Company with the remaining $22,000,000 having limited recourse.
Concurrently, approximately $43,000,000 of deferred income was
recognized by the Company. The Company acts as a servicing agent
for the financial institution and is entitled to receive a fee
for these services.
4. Net Income Per Common Share - Net income per common share is
computed by dividing (a) net income by (b) the average number of
common shares outstanding, increased by common equivalent shares
(options and Restricted Shares) determined using the treasury
stock and if converted methods.
5. Subsequent to quarter end, on April 4, 1997, the Board of
Directors declared a three-for-two split of the Company's common
stock, effected in the form of a stock dividend payable on May 2,
1997 to shareholders of record on April 18, 1997.
- -9-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources:
The Company's working capital increased $1,989,000 to $50,468,000 at
the end of the third quarter of fiscal 1997, with cash and temporary
investments decreasing to $4,886,000 from $25,039,000 at June 29,
1996. The decrease in cash and temporary investments was primarily
due to cash expended for capital projects throughout the Company.
At the end of the third quarter of fiscal 1997, the Company had a
total of $117,000,000 borrowed under a five-year $300,000,000
syndicated loan facility. Also, currently outstanding are
$125,000,000 of long-term Senior Notes issued through a private
placement completed during the third quarter of fiscal 1996. During
the second quarter of fiscal 1997, the Company entered into a
short-term $50,000,000 Commercial Paper program to finance the
build-up of frozen inventory. Borrowings outstanding under this
program at March 8, 1997 were $37,996,000.
During the first quarter of fiscal 1997, the Company sold $66,000,000
of distributor notes receivable to a financial institution. The
proceeds from this sale were used to pay a portion of the Company's
debt outstanding at that time.
Dividends paid per share increased 7% to $.1550 in the third quarter
of fiscal 1997 from $.1450 paid in the third quarter of fiscal 1996.
Results of Operations:
Sales increased 21% to $1,009,954,000 in the first three quarters of
fiscal 1997 as compared with the first three quarters of fiscal 1996.
Acquisitions consummated subsequent to the third quarter of fiscal
1996 contributed approximately two-thirds of the increase, while
increased volume of 6%, exclusive of the acquisitions was also a
factor in the sales increase. Sales increased 10% to $301,392,000 in
the third quarter of fiscal 1997 as compared with the third quarter of
fiscal 1996. Acquisitions consummated subsequent to the third quarter
of fiscal 1996 contributed approximately one-half of the increase,
while increased volume of 4%, exclusive of the acquisitions was also a
factor in the sales increase.
Pre-tax income increased 79% to $62,012,000 and 9% to $9,912,000 in
the first three quarters and the third quarter of fiscal 1997,
respectively. The sale of the distributor notes receivable during the
first quarter as discussed above generated $43,244,000 of pre-tax
income. The sale of these notes was necessitated by the Company's
decision to settle claims by the Internal Revenue Service that the
notes constituted current rather than deferred income. The gain
generated by the sale of the notes was partially offset by
approximately $19,000,000 of expenses relating to the Internal Revenue
Service audit and the write-down of certain idle facilities.
Operationally, income for the first three quarters of fiscal 1997 was
positively impacted by the Mrs. Smith's pie business, which the
Company acquired during the fourth quarter of fiscal 1996, as well as
sales and volume gains at the remainder of the Company's operations.
Operationally, income for the third quarter was positively impacted by
improving flour costs and improving performances in several of the
Company's new markets. These improvements were somewhat offset by the
seasonal loss experienced in the third quarter by the Mrs. Smith's
pie business. During the third quarter, the Company reported an
after-tax profit of $6,005,000 as a result of it's equity investment
in the Keebler Company.
- -10-
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Computation of Earnings Per Common Share.
(Pages 12 and 13)
(b) Exhibit 27 - Financial Data Schedule. (Page 14)
(c) Reports on Form 8-K
No reports on Form 8-K were filed by the Company for the
third quarter ended March 8, 1997 or during the period from
the close of the third quarter to the date of this report.
- -11-
<TABLE>
Exhibit 11
FLOWERS INDUSTRIES, INC.
COMPUTATION OF NET INCOME PER SHARE
(000's Omitted except share data)
For the 36 Weeks Ended
March 8, 1997 March 9, 1996
<S> <C> <C>
Net income for net income per common share $ 44,381 $ 21,509
=========== ===========
Number of shares used in calculation of per common
share data:
Weighted average number of common shares
outstanding during the period 58,632,272 57,858,391
Add (Deduct) - Shares issuable upon exercise of
employee stock options based on
quarter-end market price 286,815 153,541
Shares issuable upon award of
performance shares and restricted
stock award based on quarter-end
market price (994,425) (678,708)
----------- -----------
Weighted average number of shares used in calculation
of net income per common share 57,924,662 57,333,224
=========== ===========
Net income per common share $ 0.77 $ 0.38
=========== ===========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
- -12-
<TABLE>
Exhibit 11
FLOWERS INDUSTRIES, INC.
COMPUTATION OF NET INCOME PER SHARE
(000's Omitted except share data)
For the 12 Weeks Ended
March 8, 1997 March 9, 1996
<S> <C> <C>
Net income for net income per common share $ 12,170 $ 5,682
=========== ==========
Number of shares used in calculation of per common
share data:
Weighted average number of common shares
outstanding during the period 58,706,995 57,952,985
Add (Deduct) - Shares issuable upon exercise of
employee stock options based on
quarter-end market price 278,632 146,144
Shares issuable upon award of
performance shares and restricted
stock award based on quarter-end
market price (839,966) (656,005)
----------- ----------
Weighted average number of shares used in calculation
of net income per common share 58,145,661 57,443,124
========== ==========
Net income per common share $ 0.21 $ 0.10
========== ==========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
- -13-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
FLOWERS INDUSTRIES, INC.
/s/ Amos R. McMullian
By: Amos R. McMullian
Chairman of the Board
/s/ Russell M. Fryar
By: Russell M. Fryar
Vice President, Treasurer and
Chief Accounting Officer
April 11, 1997
Date
- -15-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Flowers
Industries, Inc. Consolidated Statement of Income for the twelve and thirty-six
weeks ended March 8, 1997 and the Flowers Industries, Inc. Consolidated Balance
Sheet at March 8, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> JUN-28-1997 JUN-28-1997
<PERIOD-START> JUN-30-1996 DEC-15-1996
<PERIOD-END> MAR-8-1997 MAR-8-1997
<CASH> 4,886 4,886
<SECURITIES> 0 0
<RECEIVABLES> 117,925 117,925
<ALLOWANCES> 0 0
<INVENTORY> 95,990 95,990
<CURRENT-ASSETS> 237,375 237,375
<PP&E> 742,684 742,684
<DEPRECIATION> 294,534 294,534
<TOTAL-ASSETS> 836,403 836,403
<CURRENT-LIABILITIES> 186,907 186,907
<BONDS> 0 0
0 0
0 0
<COMMON> 36,932 36,932
<OTHER-SE> 290,048 290,048
<TOTAL-LIABILITY-AND-EQUITY> 836,403 836,403
<SALES> 1,009,954 301,392
<TOTAL-REVENUES> 1,053,124 303,950
<CGS> 561,747 159,114
<TOTAL-COSTS> 991,112 294,038
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 17,423 4,938
<INCOME-PRETAX> 62,012 9,912
<INCOME-TAX> 23,441 3,747
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 44,381 12,170
<EPS-PRIMARY> 0.77 0.21
<EPS-DILUTED> 0.77 0.21
</TABLE>
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